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Annual reviews are a thing of the past—here's why

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According to the Gallup 2017 State of the American Workforce Report, less than a quarter of employees (21%) strongly agree that their performance is managed in a way that motivates them to do outstanding work. So what’s the big issue—why are nearly 80% of employees not motivated to do outstanding work? Annual performance reviews may have something to do with it.

3 reasons annual reviews don't cut it

Annual reviews are a long-used form of performance management that many managers employ out of tradition rather than strategy. In fact Gallup states:

“[managers] use annual reviews as not only the official opportunity, but also as the only opportunity to discuss performance, and once they complete it, they treat it like any other item on their to-do list -- something they can simply check off and ignore until the next time it is required.”

Let's address three key shortcomings of annual reviews.

1. Limited opportunity for coaching

When performance is measured once every year, managers lose the ability to provide continual, 360-degree feedback. This loss of consistent and real-time feedback creates room for miscommunication and lack of clarity. If an employee were to receive feedback more regularly, they would have a larger chance to ask clarifying questions and better understand their goals. Likewise, with more communication, the manager could better observe employee progress and institute more coaching opportunities.  

2. Too much room for error

Performance reviews are a bit like syllabus day: a crash review on all things that need to be done in the upcoming year. If you’re familiar with syllabus day, you’re probably also familiar with the panic that follows--what does this even mean? How am I going to get all of this done? Do I have enough time? Like syllabus day, performance review panic stands in the way of question-asking time. Employees, at this point, are likely too overwhelmed to ask the questions necessary to help them navigate the upcoming year. No questions means no answers, which ultimately leaves a lot of room for error.

3. No accountability measure

Without regular check-ins, employees are not held accountable throughout the year--only during their performance reviews. The problem with this end-of-year accountability is that it’s typically coupled with end-of-year rush. Sure, it’s nice to have employees working full-steam at the end of the year, but not when it’s at the expense of time management and productivity during the rest of the year. Rushed work typically means subpar work.

Performance management best practices

So now that we've addressed the problem, let’s look at the solution: better performance management through continual and well-rounded feedback, regular check-ins, and clear goal setting. Managers looking to maximize employee performance throughout the year should look to measure performance multiple times per year. For some companies, this may mean once per week. Others, it may mean once per month. The main idea here, is that performance management should not be a “one-and-done” kind of deal. Rather, it should be a continuum that allows managers to help employees reach their full productivity potential. 

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